When it comes to wealth, families often find themselves walking a tightrope. On one side, there’s the desire to preserve harmony and keep the family together. On the other, there’s the lingering risk of conflict over how that wealth is managed and distributed. It’s a delicate balance, and one that many ultrahigh-net-worth (UHNW) families grapple with.
Through it all, there tends to be an unspoken bias: pooling assets is preferred. But sometimes, dividing assets can actually work better to keep the family together in the long run.
Beyond the Status Quo
In our pioneering research initiative, Wealth Beyond Measure, we conducted deep, one-on-one interviews with 40 UHNW Bernstein families from every major US region and all corners of the globe. Our findings revealed that nearly two-thirds of these families rely on informal conflict resolution strategies—ranging from handling tensions in the moment, to no policy at all. Interestingly, about half of those who handle conflict informally recognize they may need to change their approach as their family grows and faces more complex issues. They understand that informal structures are more likely to fail under significant stress.
But old habits die hard. And defaulting to “the way things have always been” is often easier than braving the unknown. Through our extensive experience helping families navigate these growing pains, we’ve discovered that sometimes, strategically dividing assets can be the key to maintaining family unity.
The Fear of Conflict
First, let’s acknowledge the elephant in the room: the fear of conflict. Wealth can be a double-edged sword. On one hand, it provides opportunities and security. On the other, it can be a source of tension and discord. Families often worry that disagreements over money will tear them apart. This fear is not unfounded. As families grow—adding children, grandchildren, and in-laws—the potential for discord multiplies.
However, conflict doesn’t always have to end in destruction. In fact, some of the best learning and growth can come out of conflict. The key is to manage it effectively, like a crew sailing through a storm. Families need to be equipped to recognize conflict, manage it, and navigate out of it.
Real-World Examples
Consider the story of two brothers who inherited a family business that spanned both diamonds and real estate. They realized that their differing worldviews and family dynamics would likely lead to conflict over business decisions. So, they made the bold decision to split the business. One brother took over the diamond business, while the other ran the real estate side. This division allowed each branch to operate according to its own values and vision, ultimately leading to greater success for both. As one family member put it, “If you’ve got partners that have a different outlook on life, brought up differently, it’s very, very difficult to keep the thing going. It worked out for the right, and the business would not be where it is today had we stayed together.”
Another example comes from a family in Latin America that decided to handle their philanthropic giving at an individual or family branch level, rather than collectively. They found that this approach eased the stress of being in perfect agreement when it came to charitable contributions. As one family member noted, “We have to agree on so many things in the operating business, this takes the pressure off being in complete alignment with our giving. Jointly, it’s coming out of the operating business but then it’s going into structures that each family can decide. Then they don’t care, and I don’t care what they decide as well. Right? They’re empowered to do whatever they want.”
Lastly, consider a large family trust established for the second generation that was later split into individual trusts. The family determined that each child had their own unique goals and spending personalities. Splitting the trusts, rather than trying to reconcile wealth and decision-making, helped reduce conflict. The head of the family office noted, “One of my philosophies with the estate being settled is to divide the assets. G2 (second generation)—we have no shared assets. You know, we have one piece of property that is owned by both of them, and it’s going ok. But I think moving that asset down to G3 is not the right answer. That’s gotta be reconciled. And we have one airplane which we are going to fix that’s shared between the two siblings. That’s going to be fixed within the next two years.”
The Role of Governance
While dividing assets can be a powerful tool for reducing conflict, it’s also crucial to understand the role governance plays in achieving success. Effective governance ensures that the family follows established rules, which can prevent a breakdown in communication if family tensions arise. Without governance capturing agreed-upon guidelines, disharmony can rapidly spread.
Integrating a conflict mitigation strategy, whether informal or formal, into the governance structure helps maintain peace among family members while safeguarding the family’s assets during good times and bad. By creating and adopting established rules, a more formal policy can prevent breakdowns in communication if family tensions flare. Having a policy and guidebook in place before the conflict arises can provide a rational lens for family members to step back and de-escalate.
Divide and Prosper: Enhancing Family Unity
For most families, the ultimate goal is to preserve family harmony and keep the family together. But that doesn’t necessarily mean that the assets have to remain in a single pool. Sometimes, dividing assets can actually add value by reducing conflict and allowing each family branch to thrive according to its own values and vision. So, the next time you find yourself worrying about how to manage your family’s wealth, consider whether dividing assets might be the key to keeping your family together. After all, sometimes, dividing truly does add value.
- Anne Bucciarelli
- Senior National Director—Family Engagement Strategy